Labour migration from the EU in hard times

Newsletter articles

1 Feb 2014

Employment Studies Issue 19

Rachel Marangozov, Senior Research Fellow

It is nothing new that in difficult times, public attitudes to migration harden, as migrants are increasingly seen as competing with native workers for limited jobs and public resources. Public attitudes to the recent migration from Eastern Europe have been no exception to this and the UK government has taken this further by considering an annual cap of 75,000 to all EU migration.[1]

Labour migration to the UK since 2004 has been dominated by the EU10 countries of central and eastern Europe, with Poles accounting for two thirds of foreign nationals to the UK between 2004 and 2011.[2] But just what is the impact of labour migration on employment and is the recent hype around ‘benefit tourism’ justified?

Calculating the labour market effects of recent EU migration is not a perfect science. For example, given that migrants often settle in areas that are experiencing economic growth and strong labour demand, migration can be both a cause and consequence of changes in wages and employment, making it difficult to establish causality. Yet the available evidence strongly suggests that EU migrants have had no effect on employment levels in the UK, even post recession.[3] As for wages, the picture is more mixed. Evidence suggests that while immigration has little impact on average wages, there is a more significant impact along the wage distribution, with low-wage workers and those in unskilled or semi-skilled service sectors losing out while high-paid workers gain.[4] However, available research has shown that any adverse wage effects of migration are likely to be greatest for resident workers who are themselves migrant workers.[5]

But what about public services? According to the government there is currently no systematic evidence on the prevalence of ‘welfare tourism’. The available evidence shows that EU migration has little, if any, negative effect on public services. Dustmann et al found that EU8 migrants (from the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia) were 59 per cent less likely than UK nationals to receive state benefits or tax credits and 57 per cent less likely to live in social housing. Furthermore, even if EU8 migrants had the same demographic characteristics as natives, they would still be 13 per cent less likely to receive benefits and 29 per cent less likely to live in social housing. In a similar vein, other work has confirmed that EU8 migrants in the UK are the least likely to claim welfare benefits because of their high employment levels and high levels of education.[6] According to the most recent study on this, the ‘vast majority’ of EU migrants moving to another EU state do so to work or to look for work and are more likely – because they are younger – to be in employment than the nationals of the host country.[7] This study also showed that in most countries, immigrants are not more intensive users of welfare than nationals and this concurs with earlier evidence which also found that mobile EU citizens have not relied on social services due to their high levels of employment.[8]

If welfare tourism really was a driver of recent EU migration, then it would have been Sweden, with its more extensive welfare state, and not the UK, which would have seen much higher numbers of EU10 migrants after the 2004 round of accession.[9] As it turned out, Sweden only received an average of 5,000 Polish migrants per year between 2004 and 2011, while the UK received 45,000. Instead of welfare protection, wage differentials and demand for labour seem to have played a bigger role in driving recent EU migration.

On the basis of this evidence, therefore, it is fair to say that most migrants come to the UK not to claim benefits but to work and build a better life for themselves – the recent furore over opening the UK’s borders to migrants from Bulgaria and Romania proved to be overstated, as the expected numbers of migrants has, so far, failed to materialise.

Further, even the prospect of a better life in the UK is not certain. Many migrants are open to exploitation and have poor living conditions.[10] In some sectors, there is little opportunity for migrants to progress in the workplace, despite possessing relatively high levels of education and skills. And for those migrants wanting to integrate into UK life, reductions in English language learning provision mean that this is only now available to those who can afford to pay (not a realistic prospect, given that EU10 migrants are predominantly concentrated in low paid work).[11]

At a time of austerity and widespread public concern over immigration, it is perhaps all too easy to claim that migrants are to blame for a host of wider problems in the UK, such as pressure on the welfare system, unemployment, under-investment in skills and the problem of low-skilled, low-waged work as an entrenched feature of the economy. However, these claims lack robust evidence[12] and could lead other Member States to impose their own restrictions to welfare assistance for the one million or so UK nationals who live and work elsewhere in the EU.

Footnotes [back]

[1] A report drawn up by the Home Office was leaked in December 2013, see: The Guardian (2013) Government considers EU immigration cap of 75,000 a year [online] Available at: http://www.theguardian.com/ uk-news/2013/dec/15/eu-annual-immigrationcap- government-report [accessed 28 Janiary 2014]

[2]Salt, J (2012), International Migration and the United Kingdom. Annual Report of the UK SOPEMI Correspondent to the OECD. London: Migration Research Unit UCL.

[3] Lucchino, P., Rosazza-Bondibene, C. and J. Portes (2012), ‘Examining the relationship between immigration and unemployment using National Insurance Number Registration Data.’ NIESC Discussion Paper 386, National Institute of Economic and Social Research; Migration Advisory Committee (2012), Analysis of the Impacts of Migration. Home Office.

[4] Dustman, C., Frattini, T. and I. P. Preston (2008), “The effect of immigration along the distribution of wages”. CReAM Discussion Paper No. 03/08, Centre for Research and Analysis of Migration, Department of Economics, University of London; Nickell, S. and J. Salaheen (2008), “The impact of immigration on occupational wages: Evidence from Britain.” Working Paper No. 08-6, Federal Reserve Bank of Boston.

[5] Manacorda, M., Manning, A. and J. Wadsworth (2007), “The impact of immigration on the structure of male wages: Theory and evidence from Britain” in Research in Labour Economics 26, pp. 125- 155.

[6] Drinkwater S and Robinson C (2013), ‘Welfare participation by immigrants in the UK’, International Journal of Manpower, Vol. 34, No. 2, pp. 245 – 286.

[7] http://ec.europa.eu/employment_social/empl_portal/facebook/20131014%20GH... study%20web_EU%20migration.pdf

[8] Barrett A and Maître B (2011), Immigrant welfare receipt across Europe, IZA Discussion Paper 5515.

[9] In 2004, only three countries chose to open their labour markets right away to citizens of new member states: UK, Ireland and Sweden.

[10] A 2013 Home Office report in on conditions for immigrants found widespread ‘poor quality, overcrowded accommodation, inflated rents… exploitation by unscrupulous landlords and a growing number of “beds in sheds.”’

[11] Marangozov, R. (forthcoming), Labour market integration of new immigrants: A case study for the Migration Policy Institute.

[12] IES is currently undertaking research for the European Foundation for the Improvement of Living and Working Conditions (Eurofound) on the impact of EU10 migration on public services in the UK and on welfare assistance.